Entrepreneur Vince Cirrincione III had a natural affinity with his longtime bank, a locally based lender that had made several loans over the years to his family's Pittsburgh-based medical and industrial gas supply company. He liked the bank's personal service and quick loan decisions. And he didn't have to worry about getting lost in the shuffle of a large bank.

As it turns out, Cirrincione should have been worried about his bank's ability to keep pace with his company's growing borrowing needs. It's a lesson the 47-year-old entrepreneur would learn the hard way. Four years ago, when Cirrincione needed more than $2 million to buy a gas-filling facility in Akron, Ohio, the bank had to take a pass--not because it doubted Cirrincione's ability to repay the loan, but because of its own lending limitations. "We were dumbfounded," recalls Cirrincione, president of Sky Oxygen, the $10 million business he runs with his sister, Laurie Waller, 46.

Realizing its funding limitations, the bank urged Cirrincione to contact a bank more capable of supporting a capital-intensive business like his: Pittsburgh-based PNC Financial Services Group. Not only is it a significantly larger bank, but it also happens to be one of the biggest banks in the country.

"My first thought was, 'I'm probably not going to be a big enough fish for them to want to put this deal together for me.' [But] not only did they come back with a quick approval, they also said, 'Hey, if you're looking to do some more expansion, we think there is still some room to grow with you,'" recalls Cirrincione, whose company has recently expanded into northwestern Pennsylvania with the help of a PNC loan.

Though he was initially wary of large banks, Cirrincione found a winning combination in PNC: a surprisingly high level of personal service and, most important, the security of having a lender he could go to every time he wanted to expand his business.

Maxed Out
Many entrepreneurs can relate to Cirrincione's story. While your credit needs may be simple now, that can easily change with a major expansion or sales opportunity. When that happens, you can't afford to let your lender's size, lending limitations or lack of industry expertise hold you back.

The good news is that the gap between what small banks offer and what large lenders can provide is getting smaller. Instead of turning away borrowers whose financing needs exceed the bank's legal lending limit--which dictates the amount of money it can lend to any one borrower--some banks find other lenders to take on part of the debt. This arrangement, known as loan participation, allows banks to stay within their legal lending limit. Borrowers benefit because they don't have to look for another lender and transfer their existing accounts--loans, deposits, cash management services and so on--to another bank.

While many small businesses can be adequately funded under this arrangement, those anticipating serious growth may see lending limitations as something else: an important wake-up call. "The client may say, 'If this loan is too big for you and you have to participate it out, maybe it's time for me to look at a bigger bank,'" says consultant and former banker Monica Dolezal.

Business consultant Hugh Tama says that gauging your bank's comfort level with large loans is just as important, if not more important, than what its legal lending limit is. "Some banks might have a legal lending limit of, say, $25 million, but [they] may not be comfortable doing a loan of $25 million," says Tama, partner and CPA at Los Angeles-based accounting firm Stonefield Josephson Inc. "Even though you want to know the legal lending limit, you also want to know what lending level they're comfortable at."

More often than not, Tama says, there will be clues that you're getting too big for your bank. One of the first signs of trouble: You begin to feel like a big fish in a small pond. "If you start hearing from the lending officer about having to revise covenants, that means the bank's getting nervous. And if you're doing well, they are probably getting nervous because you're getting too big for [them]," he explains.

Sometimes it's not what the bank is saying, but rather what it's not saying. Perhaps you are no longer getting good advice from your banker, who was once one of your best advisors. But since your company has grown, that banker no longer understands the demands of your business and is unable to help you with strategic matters.

The Search Is On

The Search Is On
When it's time to find a larger bank, take the time to find the right one. For starters, you'll have to determine what your long-term needs are and carefully assess how well a particular bank can meet them. For instance, if, like Cirrincione, you plan to expand into a neighboring state, you will probably need a bank that has branches there. Likewise, if you're interested in eventually buying or selling overseas, it may be necessary to have a bank that can handle letters of credit and provide financing to support foreign trade.

At the same time, assess how well a prospective bank understands your business. Does it have experience lending to businesses like yours? If not, does it appear to be willing to take the time to learn about you and your industry? A knowledgeable banker is more likely to support your long-term financing needs than someone who does not understand what drives your business and the factors that contribute to its challenges and successes.

One of the best ways to evaluate banks is to talk to other entrepreneurs. Most banks have some kind of reputation in the business community, and many entrepreneurs are more than willing to share their personal banking experiences--the good, the bad and the ugly.

Once you've chosen a bank, make an effort to develop relationships with more than one person at the institution so that if your banker gets promoted or leaves the firm, or your bank gets acquired, you'll still have ties to someone there.

Finally, avoid getting too comfortable--and complacent--in your banking relationship. Tom Nist, senior vice president of PNC, suggests that business owners solicit proposals from other banks every couple of years to see if there might be a better fit. "One way of realizing it's time to change is not to feel a specific pain," Nist says, "but to have a checkup and have other people spot things that you might not have seen."

Crystal Detamore-Rodman is a Charlottesville, Virginia, writer who covers the small-business finance market.